Bangkok--8 Aug--Thai Union Frozen Products
TUF announced its 2011's second-quarter results today with strong year-on-year growth in sales and net profit. Net profit surged 42% from a year ago, thanks to sales surging by 55% and 46% in US dollar and Thai baht term respectively. In other words, net profit for the first half of the year attained 1,990 million baht. All subsidiaries in US and Europe have been well on track and delivered promising performance as anticipated. In consideration of current favorable developments, the management is confident that the consolidated annual sales of Thai Union Group should surpass the originally set target of 3,000 million US dollar this year. As a result, the Company is poised to proceed towards its longer term sales target of 4,000 million US dollar by 2015.
Thiraphong Chansiri, president of Thai Union Frozen Products PLC (TUF), Thailand's major processor and exporter of canned and frozen seafood products, revealed that, for the second quarter of 2011, the Company managed to achieve 1,238 million baht in net profit, up 42% against 873 million baht of the same period last year. The figure represented earnings per share of 1.29 baht, equivalent to 31% year-on-year increase as robust sales growth in both US dollar and Thai baht term continued. Quarterly sales in US dollar term surged sharply by 55% to 821 million US dollar from 529 million US dollar a year ago while sales in Thai baht term reached 24,860 million baht, representing 45% growth, compared with 17,092 million baht in Q2/2010.
With regards to the overall operating performance for the first 6 months of 2011, TUF has to date generated 1,564 million US dollar in sales, representing 52% increase from 1,026 million US dollar recorded in the corresponding period of 2010. Sales in Thai baht term also jumped 42% from 33,421 million baht last year to 47,565 million baht this year. Net profit for the first six-months amounted to 1,990 million baht, up 17% from that of last year. Earnings per share were 2.08 baht, 8% higher than that of a year ago.
The Q2/2011 operating performance exhibited strong profit growth, thanks to proactive cost control measures. Volatile and generally rising tuna and shrimp prices depressed the Company’s earnings during the past two quarters. Nevertheless, active cost control measures and timely selling price adjustments were used to respond to the challenging business environment. Meanwhile, sales contracts were also shortened to improve pricing flexibility. In addition, there were no more expenses or accounting impacts in relation to the MW Brands acquisition booked during the quarter. MW Brands performance has also been on track, meeting all growth targets and continuously reported satisfactory results since the acquisition. TUF continued to deliver robust sales growth, particularly evident from up to 100% increase in its tuna business, 40% increase in sardines and mackerels sales and 15% increase in frozen shrimp sales in the second quarter. With consistently positive business developments, TUF’s quarterly gross margin also improved, rising to 17% during the second quarter.
For this quarter, tuna products remain the largest sales item in the Company's product portfolio at 50%, followed by frozen shrimp (18%), products for the domestic market (7%), canned pet food (6%), canned seafood (5%), shrimp feeds (5%), canned sardines and mackerels (4%), frozen salmon (4%) and frozen cephalopod (1%). Main export markets include the US (35%), Europe (35%), Japan (10%), the domestic market (8%), Australia (3%), Asia, ex-Japan (3%), Africa (2%), the Middle East (2%), South America (1%) and Canada (1%) of the total sales.
TUF recently successfully placed a series of bonds to a group of institutional investors and witnessed strong response and excessive demand on the book-building day, allowing us to increase the issuance size from the initially planned 4,500 million baht to 6,750 million baht. The issued debentures are of 3-year, 5-year and 10-year maturity with respective coupon rates of 4.51%, 4.70% and 5.02%. The purpose of the bond issue is to prepay part of TUF’s existing loans which will help reduce funding costs and provide more financial management flexibility. TUF’s corporate policy over the next two years will emphasize loan repayment and profitability improvement.
“All these achievements reflect our strong business foundation and solid financial position. We remain well equipped and strategically positioned to handle emerging and ongoing challenges effectively. The current performance of TUF and its subsidiaries indicates that greater opportunities and more promising business outlook lie ahead. With these ongoing positive developments, we are reasonably convinced that we stand a good chance to attain our longer term annual sales target of 4,000 million US dollar by 2015,” said Thiraphong.
In addition, TUF Board of Directors today passed a resolution to pay an interim dividend of 0.91 baht per share from the net profit generated between January 1 and June 30, 2011. The payment will be made on August 30, 2011. This year’s dividend policy, however, differs from those of previous years, with a predetermined dividend ceiling of no more than 1,200 million baht for the entire year. This dividend payout policy is considered temporary and aims to lower the Debt-to-Equity (D/E) ratio following the recent MW Brands acquisition. Upon achieving the normal level of D/E ratio, TUF will restore the long time dividend policy where at least 50% of annual net profit is paid as dividend. TUF is confident that this short-term move should provide long-term sustainable returns to its shareholders and investors.
Corporate Communications Department
Tel. 02-298-0024 ext. 609, 675-678